Summary
Atlassian closed fiscal 2025 with fourth quarter revenue of $1,384.3 million, up 22% from $1,131.6 million in the same quarter last year. Full year revenue reached $5,215.3 million, up 20%. Growth in the quarter leaned on Cloud, up 26%, and subscription revenue, up 23%. Data Center grew 17% and Marketplace and other grew 13%. The company credited paid seat expansion, higher average revenue per user, and cross-sell of additional products for the increase.
Profitability improved on a GAAP basis. Gross margin was 83.1% for the quarter, up 2.3 percentage points, as higher Cloud gross margin offset the drag from the shift of revenue mix toward Cloud. The operating loss narrowed to $28.5 million from $67.0 million, and operating margin came in at (2.1)% versus (5.9)%. The net loss narrowed to $23.9 million from $196.9 million. Non-GAAP operating income was $335.9 million at a 24% margin, compared with $222.0 million at 20%, and non-GAAP net income was $259.1 million, or $0.98 per diluted share, against $171.4 million and $0.66.
The full year was less flattering. Revenue of $5,215.3 million still produced a GAAP operating loss of $130.4 million, wider than the $117.1 million loss in fiscal 2024, as stock-based compensation and hiring in research and development and sales lifted operating expenses. The full year net loss narrowed to $256.7 million from $300.5 million, and net loss per diluted share improved to $0.98 from $1.16.
Cash generation cooled in the quarter. Operating cash flow was $375.3 million, down 11.9% from $426.2 million, which the company attributed mainly to prior year collections tied to Server end-of-support. Free cash flow was $360.3 million, down 13%, for a 26% margin. For fiscal 2025, operating cash flow was $1,460.4 million, up 0.8%, and free cash flow was $1,415.5 million, approximately flat against fiscal 2024, at a 27% margin. Capital expenditures for the year were $44.85 million, up 35.4%.
Backlog and deferred revenue both grew. Deferred revenue ended the year at $2.48 billion, up 17.3%, and remaining performance obligations reached $3.3 billion, up 37.5%, with about 74% expected to be recognized in the next twelve months. Cash and cash equivalents plus marketable securities totaled $2.9 billion. Atlassian finished the quarter with 51,978 customers spending more than $10,000 in Cloud ARR, up 13%, and those accounts represent over 85% of total Cloud ARR. Cloud net revenue retention was approximately 120%.
AI and enterprise selling supplied the growth story. AI monthly active users reached 2.3 million, up 50% since the prior quarter, and AI interactions climbed nearly 20x year over year. The company signed a record number of deals above $1 million in annual contract value, up more than 2x year over year, and the Teamwork Graph now holds over 80 billion data objects. Data Center to Cloud migrations for the year rose over 60%. Headcount ended at 13,813, up 443 from the prior quarter.
Guidance for the first quarter of fiscal 2026 calls for Cloud revenue growth of approximately 22.5%, Data Center revenue growth of approximately 8.0%, and Marketplace and other revenue growth of approximately 11.5%. First quarter gross margin is expected near 82.5% and non-GAAP gross margin near 84.5%, with non-GAAP operating margin guided to approximately 20.5%. For the full fiscal year 2026, management guides to total revenue growth of approximately 18.0%, Cloud growth of approximately 21.0%, Data Center growth of approximately 12.5%, and Marketplace and other growth of approximately 10.0%, with gross margin expected near 83.5% and non-GAAP gross margin near 85.5%. Full year non-GAAP operating margin is set at approximately 24.0%. Diluted share count is expected to increase less than 2%.
The plan assumes a cautious backdrop. Management built room into the outlook for macroeconomic pressure on paid seat expansion, cross-sell, upsell, and retention, and for disruption from the ongoing evolution of its enterprise go-to-market motion. Data Center faces a policy change to one-year deal terms, and the company expects customers preparing to migrate to moderate seat expansion, which pushes growth into the second half of the year. Higher AI processing costs as Rovo usage grows weigh on gross margin. President Anu Bharadwaj will leave the company effective December 31, 2025.
Forecast
Reported figures
GAAP, from SEC filings| Metric | Q4 FY2025 | Q3 FY2025 | QoQ | Q4 FY2024 | YoY |
|---|---|---|---|---|---|
| Revenue | $1.38B | $1.36B | +2.0% | $1.13B | +22.3% |
| Gross profit | $1.15B | $1.14B | +1.1% | $914.1M | +25.8% |
| Gross margin | 83.1% | 83.8% | -0.7 pp | 80.8% | +2.3 pp |
| Research & development | $700.7M | $685.3M | +2.2% | $589.1M | +18.9% |
| Sales & marketing | $314.4M | $295.8M | +6.3% | $239.6M | +31.2% |
| General & administrative | $163.3M | $168.3M | -3.0% | $152.3M | +7.2% |
| Total operating expenses | $1.18B | $1.15B | +2.5% | $981.0M | +20.1% |
| Operating income (loss) | -$28.5M | -$12.5M | -128.6% | -$67.0M | +57.5% |
| Operating margin | -2.1% | -0.9% | -1.1 pp | -5.9% | +3.9 pp |
| Net income (loss) | -$23.9M | -$70.8M | +66.2% | -$196.9M | +87.9% |
| Net margin | -1.7% | -5.2% | +3.5 pp | -17.4% | +15.7 pp |
| Diluted EPS | -$0.09 | -$0.27 | +$0.18 | -$0.76 | +$0.67 |
Risks
Atlassian is investing heavily in AI, including Rovo, but states its AI offerings and investments may not be successful and expects these investments to continue to negatively impact operating margins in the near term. Rovo is offered at no additional cost to premium and enterprise Jira, Confluence, and Jira Service Management customers, which may not be offset by new customer wins or expansion.
Continuing global economic and geopolitical volatility, including trade wars, tariffs, or other trade restrictions, could cause decreased demand, elongated sales cycles, budget cuts and freezes, and reductions in paid seats. The filing also notes revenue growth from existing customers has moderated and that stock price volatility may continue.
The shift to Cloud offerings is affecting results, with higher cloud hosting fees having increased expenses and expected to continue to lower margins. Offering AI tools at no or low cost to most Cloud customers may further increase hosting costs without corresponding revenue, while Cloud revenue is typically lower in the initial year than Data Center revenue.
The business depends on customers renewing subscriptions and purchasing additional licenses, but the majority of the customer base is on annual or monthly terms and retention or expansion can decline due to satisfaction, pricing, packaging changes, the increased Cloud focus, or competition. Any decline in retention or expansion could harm future results.
Success depends on executive officers and key employees, and the filing notes the former Co-CEO stepped down effective August 31, 2024, the President will step down effective December 31, 2025, and competition for AI and product engineering talent is intense. Fluctuations in the value of equity awards could also harm recruiting and retention.
Atlassian's markets are intensely competitive, fragmented, and have relatively low barriers to entry, and competitors may develop or incorporate AI more successfully or have greater resources and larger enterprise sales forces. Acquisitions by competitors could create more compelling offerings and increase pricing pressure.
A majority of revenue is derived from Jira, Confluence, and Jira Service Management, making market acceptance of these products critical. For fiscal year 2025, over 50% of revenue came from channel partners' sales efforts, and at times one solution partner represented more than 10% of total accounts receivable.
Expanding the enterprise sales force increases costs and creates longer, less predictable sales cycles, with adverse macroeconomic conditions previously delaying enterprise purchasing decisions. Pricing and packaging strategies, including purchasable Collections, have limited operating history and may not be accepted by customers.
Evolving privacy, AI, cross-border data transfer, and data residency regulations may increase costs, reduce demand, and require product or operational changes. The filing highlights expanding AI regulation, including the first EU legal framework entering into force, and laws such as GDPR and CPRA.
The filing warns that Atlassian invests significantly in research and development and that if these investments do not translate into new offerings or material enhancements, or are not used efficiently, business could be harmed. It also notes research and development cycles can be technically challenging and expensive, with delays between expenses and revenue.
The company states significant investments, in particular stock-based compensation, have contributed to past GAAP losses and may prevent future GAAP profitability. For fiscal year 2025, operating loss widened to $130.4 million from $117.1 million in fiscal year 2024, even as non-GAAP results exclude large stock-based compensation.
The global minimum corporate income tax framework and the One Big Beautiful Bill Act may increase Atlassian's effective tax rate and cash tax payments in future years. The filing notes future rates may be adversely affected by earnings mix in Australia.
Atlassian has experienced security breaches and inappropriate access in the past and may be a target of state actors, with AI integration and a remote-first work environment potentially increasing cybersecurity risks. Third-party apps on the Atlassian Marketplace may introduce bugs or vulnerabilities that pose data security risks.
The low-touch customer model relies on a high volume of transactions, free trials, and affordable starter licenses, but historically a majority of users do not convert from free or limited free versions to paid products. Price increases and competitor free or lower-cost alternatives may hurt the efficacy of this strategy.
SaaS KPIs
All quarters →Total customers
Non-GAAP Operating Margin
Free Cash Flow Margin
Free Cash Flow
Customers with >$10,000 in Cloud ARR
Summary, forecast, risks and KPIs are extracted from Atlassian Corp's SEC filings for Q4 FY2025 (10-Q / 10-K and the 8-K earnings release); GAAP figures in the summary are checked against the reported XBRL data. They can contain errors; the filings are authoritative. Processed Oct 6, 2026.